Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Figure 3-5 -Refer to Figure 3-5.At a price of $20

Figure 3-4 -Refer to Figure 3-4.At a price of $15, how many units will be sold?

Figure 3-3 -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market?

A decrease in the equilibrium price for a product will result

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of a substitute good would be represented by a movement from

Figure 3-4 -Refer to Figure 3-4.If the price is $15,

Which of the following statements is true?

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all. a.An increase in the number of firms in the market b.An increase in the current price of the product c.A decrease in productivity d.An increase in the expected future price of a product e.A decrease in the price of an input

In October 2005, the U.S.Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea.What happened in the market for caviar in the United States?

Figure 3-1 -Refer to Figure 3-1.If the product represented is an inferior good, an increase in income would be represented by a movement from

Harvey Rabbitt pays for monthly cable TV service.Last week the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area.How is the market for cable TV services affected by this?

If the price of automobiles was to increase, then

Figure 3-2 -Refer to Figure 3-2.A decrease in productivity would be represented by a movement from

The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes.Which of the following best explains the effect of these events in the cigarette market?

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

What are the two effects that explain the law of demand? Briefly explain each effect.

A surplus occurs when the actual selling price is above the market equilibrium price.

"Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement?